Investors saw the declining stock market as a buying opportunity in January, with net buying of dividend paying and lower volatility stocks, according to TD Ameritrade’s recent Investor Movement Index.
The index, which aggregates Main Street investor positions, found that investors were net buyers of equities. But the index fell to a reading of 4.52 during the month, compared to 4.92 in December. TD Ameritrade attributed the decline to market volatility and relative stability of some widely held positions.
In January, both the S&P 500 and Dow Jones Industrial Average fell nearly 6 percent, back to August 2015 levels.
“Global economic concerns, including sharp sell offs in the Chinese stock market that triggered circuit breakers and halts to trading, seemed to drag the markets lower,” TDA said. “An increase in crude oil supply put pressure on the price of that commodity, which seemed to affect the stock markets adversely. As stock markets plunged, treasury bonds rallied indicating a flight to safety. Dividend paying stocks seemed to also outperform the broad equity markets as indicated by the Dow Jones U.S. Select Dividend Index.”
High dividend-paying stocks such as AT&T, Verizon and Ford Motor Company were net buys during the month, TDA found.
The index is based on a sample from TDA’s client base of 6 million funded accounts that includes all accounts that completed a trade in the past month.